MAURITIUS FOURTH NATIONAL ASSEMBLY FIRST SESSION. Thursday 28 May 2009 CONTENTS

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1 MAURITIUS FOURTH NATIONAL ASSEMBLY FIRST SESSION Thursday 28 May 2009 CONTENTS PAPER LAID QUESTION (Oral) MOTION BILL (Public) ADJOURNMENT

2 1 MAURITIUS Fourth National Assembly Debate No. 11 of 2009 Sitting of Thursday 28 May 2009 The Assembly met in the Assembly House, Port Louis, at a.m The National Anthem was played (Mr Speaker in the Chair) PAPER LAID The Prime Minister: Sir, the Paper has been laid on the Table Ministry of Education, Culture and Human Resources: The Annual Report 2006/2007 of the Mauritius Qualifications Authority. ORAL ANSWER TO QUESTION ADDITIONAL STIMULUS PACKAGE FIRMS - MONEY DISBURSED The Leader of the Opposition (By Private Notice) asked the Vice-Prime Minister, Minister of Finance and Economic Empowerment whether, in regard to the financial assistance given to private firms by Government and the State Investment Corporation under the Additional Stimulus Package, he will state (a) (b) (c) the names of the firms having benefited therefrom as at todate, indicating in each case (i) (ii) (iii) the number of employees; the sums disbursed, and if any of them has laid-off employees; the names of the consultants involved, if any, and the limitations, if any, imposed on the remuneration and other benefits accruing to the top management. The Vice-Prime Minister, Minister of Finance and Economic Empowerment (Dr. R. Sithanen): Mr Speaker, Sir, to understand Government actions to protect people by saving jobs it is essential to recall that we are living in

3 2 exceptional times with unprecedented events. It is by now well-known that we are living through the worst and most serious global economic challenge since the 1930 s. As a sign of these exceptional times is that General Motors, long the dominant car maker in the World and associated with the strength of the US economy, now appears on its way to bankruptcy. Similarly, in the birthplace and major home of capitalism, the UK and US, Government is now intervening heavily in the market including nationalization of banks and taking controlling interests in large corporations such as Chrysler. Everywhere, unorthodox policies are emerging in countries that are combating the ill effects of this Great Recession. Our efforts to save jobs must be seen in this global context and it is important to take into account the praise and support our actions are unlocking from the international community. Indeed one of the most troubling aspects is a severe jobs recession that is unfolding across the globe with global unemployment rising at an alarming pace leading to sharp reversals in social progress in many countries. International and regional forecasts of economic performance are equally bleak. The predictions, one after the other, keep on getting more pessimistic. The latest IMF forecasts put global GDP growth at negative 1.3 percent and in our region South Africa has surprised yesterday by the depth of the recession over 6 percent and is suffering with unemployment at about 24 percent. It is now feared that the recession will cost 100 million jobs and trap over 100 million more in poverty with 40 million people already out of work. A human and social crisis is unfolding where the best bonus to workers is to keep one s job. To keep their jobs, many hitherto unimaginable approaches are being adopted across the globe. To preserve jobs, workers have to cut their wages, accept shorter working week and even involuntary unpaid leave. No country is spared. It is happening in strong high income OECD countries like the US, the UK, Japan, Germany and France as well as in developing countries like China and India and emerging economies that were star performers less than a year ago as in the Baltics and Central Europe. Even Nordic countries and Canada, long world leaders on the Human Development Index, are not spared. Our need to respond is heightened because we are an export platform and particularly badly hurt when World Trade declines by 11 percent - its sharpest fall in 80 years. The collapse of long haul world tourism travel, due to economic and health reasons, further affects us. Finally, our economy has been benefiting from unprecedented flows of FDI in response to our reforms. This has driven never before seen levels of job creation in our country but is now under threat. Mr Speaker: May I be allowed to interrupt the hon. Minister. May I be allowed to intervene at this stage? I think that the hon. Vice-Prime Minister, Minister of Finance and Economic Empowerment has over the last 2-3 days explained fully all the reasons why he has had to bring the stimulus package; this has been fully debated. I think, according to our rules, we have to stick to the question although some latitude is

4 3 given. I have given the Minister enough latitude. Now, I think he has to come to the question. Dr. Sithanen: I have no problem, Mr Speaker, Sir, if there is more time given to the hon. Leader of the Opposition to ask questions. Developing countries are expected to decline by 80 percent compared to 2007 figures. Unfortunately our scope to respond is limited by the small size of our domestic market which means instruments available to China, India and even South Africa are either ineffective or have only weak impact. This has been a key constraint in developing a Mauritius approach that draws us on the best from the international response but, at the same time, adapted to our needs. Mr Speaker, Sir, the best way to preserve social cohesion, safeguard progress with human development and protect families and people is to preserve jobs. This is what we have done through the nine ways that I have announced in the Budget. As regards part (a) of the question, the Mechanism for Transitional Support has directly saved 2,783 jobs by keeping 5 enterprises going that were at the breakdown point. Mr Speaker, Sir, it is important to repeat that we are not doling out money to enterprises. Instead, Government is investing responsibly in temporarily distressed, but viable enterprises to both save jobs as the best way to protect people and to generate a fair return for the taxpayer. Government is participating through four channels - (i) investing through SIC in debentures at 5 percent interest and redeemable within 5 years; (ii) providing limited guarantees to enable additional lending by commercial banks; (iii) taking equity stakes in the company, and (iv) purchasing assets to provide firms with necessary liquidity. As announced in the budget, we are also widening our interventions to broaden to all sectors and deepen through instruments. For the MTSP, before Government intervenes, there is a due diligence exercise that involves thorough investigation and analysis by independent consultants and discussions with the company s bankers as well as the main shareholders. Assistance is provided conditional on the firm taking measures to control costs including pay and bonuses to management. Moreover, until Government assistance has been paid back, no dividends can be declared and non-revenue generating assets need to be reduced to minimum. The independent consultants are also tasked with regular monitoring to ensure that conditions are being met and the enterprise is taking steps to remain viable. This includes adhering to the agreed cost-cutting plan that involves the above set of measures. Mr Speaker, Sir, five companies where agreement has been reached so far are - 1. World Knits: 1,700 jobs saved with an investment of Rs40 m. in debentures out of a total of Rs100 m. No worker, as far I as know, has been laid off as part of the restructuring;

5 4 2. Beachwear Exports Company: 160 jobs saved with an investment of Rs15 m. in debentures and an acquisition of an industrial building at a cost of Rs50 m. plus charges. No worker has been laid off as part of the restructuring and banks are providing an additional Rs15 m. facility; 3. RS Fashion: 300 jobs saved with Rs3 m. guarantee of additional financing from the commercial banks to meet its working capital needs until 30 June No worker has been laid off as part of the proposed restructuring whereby the company had made a request for Rs100 m. involving asset swap. However on the basis of the report of the financial analyst, it was considered that only an interim package of a total of Rs8 m. be provided of which the shareholder will inject Rs2 m. the banks providing Rs6 m. with a guarantee from SIC of 50% of the Rs6 m, that is, Rs3 m. 4. RS Denim: 325 jobs saved with financing by SIC of working capital up to Rs30 m. by June The request has been made by the main lender, namely DBSA - Development Bank of Southern Africa. This is a coordinated intervention with the principal creditor, that is, the DBSA to ensure that the company can be sold as an ongoing concern to preserve jobs. Placing the company into receivership now would have given the wrong signal to the international buyers of our textiles and clothing exports. MTSP along with major creditors decided to provide the breathing space to find a buyer to prevent a distress sale. The facilities provided are subject to the stakeholders committee overseeing the conduct of the business and coordinating the sale of the business. An interim manager has been appointed by the Stakeholders Committee. The main shareholder of RS Denim has voluntarily relinquished all his rights to the new management of the company. The position of taxpayers has been protected: the Rs30 m. committed by Government will rank above all other creditors to be repaid from the proceeds of sale. To date no worker has been laid off as part of the restructuring, and 5. Avant (Mauritius): 298 jobs saved with an investment from SIC of Rs10 m. in debentures and Rs4 m. in the form of guarantees and Rs10 m. of additional financing by commercial banks. No worker, to my knowledge, has been laid off as part of the restructuring. Concerning part (b), leading accounting firms were approached and those that agreed to a reduced rate of Rs4,000 per hour which is half their normal rate, were selected to support the MTSP due diligence process. These firms are Baker Tilly, BDO/DCDM, Deloitte, Ernst & Young, Grant Thornton, KPMG. To assist SMEs to prepare for their due diligence process, the MTSP has hired an independent consultant, Mr Michael Lim with wide experience from Enterprise Mauritius and State Bank of Mauritius, for a determined period of 6 months at Rs 75,000 per month. As regards part (c) Mr Speaker, Sir, as I have just mentioned, there are conditions on the remuneration and other benefits accruing to the top management as part of the cost cutting exercise. The term sheet signed by all parties contains both conditions precedent and conditions subsequent to ensure compliance. There is also a

6 5 monitoring exercise to enable adherence to the terms and conditions of the agreement. Mr Bérenger: Mr Speaker, Sir, can I know from the hon. Minister of Finance - whether there is available - what is the expected total amount to be disbursed to private firms under that programme and how much of it Government estimates that will be recouped? Dr. Sithanen: Mr Speaker, Sir, it is a difficult question. Nobody has the answer. I would like to find the person who has this answer. Basically, it is about risk and reward and I am sure that the hon. Leader of the Opposition knows that. I have given the figures for the five companies where the money has already been disbursed. You can see, Mr Speaker, Sir, that we have used three instruments- (i) debenture at the rate of interest of 5%; (ii) a guarantee for a facility given by commercial banks, and (iii) an asset swap for a company. You can see in the case of asset swap we are guaranteed already because the company wanted Rs80 m. for that building; SIC has paid Rs50 m. so, there is a guarantee in case of a failure. In many cases we would like, as Government, that these enterprises succeed, maintain jobs, pay back the money and we are back to normal but there is no guarantee; the hon. Leader of the Opposition knows that, Mr Speaker, Sir. What are the risks and rewards? The rewards of the scheme, Mr Speaker, Sir, are that we can save jobs, protect people and they will gain their livelihood. We know 45,000 people lost their jobs between 2003 and 2005 and this has inflicted a lot of suffering on 80% of them who were women. So, this is the human toll that we are trying to avoid. The risk, maybe some will not make it. But I have said in this House, Mr Speaker, Sir, that, in some cases, we will not be able to save these jobs. There is one case where we thought that the model was not viable and sustainable and the financial institutions were too greedy, we did not support it. It is difficult to answer this question. What can we do Mr Speaker, Sir, is to come to the House on a regular basis to say how much money has been spent, how much has been provided by the banks, whether the conditions have been adhered to and then it will depend to a large extent on what happens to the world economy. Let me give the hon. Leader of the Opposition an example because it is from his Constituency. There is one company that straddles his Constituency and my Constituency and that of my colleagues, hon. Xavier Luc Duval and hon. Ms. Deerpalsing. The gentleman came to see me, Mr Speaker, Sir; he has been a loyal supporter of Mauritius for 25 years. He is leaving. He came to see me, I told him: why don't you stay? He said, Minister, I love your country, I am leaving for three reasons. First, the demand for my products has gone down because I sell to the UK market. Second, the rupee has appreciated. Third, we are going to China, to Bangladesh and to India where we are getting a subsidy on export earnings. Mr Bérenger: Can I know from the hon. Minister, before money is extended to those firms, who takes the final decision? Is it a committee? Is it the Ministry? Dr. Sithanen: Mr Speaker, Sir, let me explain the process because I think this is a very fair question. They apply to the MTSP Committee and there is a desk at

7 6 Enterprise Mauritius, now there will be two desks one at Enterprise Mauritius and one at SEHDA because we want to give dedicated service to the SME. There is a first analysis that is carried out by the committee; there is investigation and analysis and then there is an independent financial analyst who makes a detailed analysis of the long-term viability of the company. Est-ce que le problème est conjoncturel ou structurel? Then on the basis of the report submitted by the independent financial analyst, the committee brings together the shareholder, the banks, SIC and the independent consultant. Then the decision is made by this committee after they have reached agreement with the banks and the shareholder. Let me give the example of one company, Mr Speaker, Sir. They reached agreement with World Knits after the independent financial expert submitted that it has a future. So, Rs40 m. were put by the banks, Rs40 m. by the Government through the SIC and Rs20 m. by the shareholder. The final decision is made by the committee. Let me be very fair, Mr Speaker, Sir. There will be some risks; there is no decision you take in life that is a riskless proposition. But the alternative is basically massive job layoff. If there is massive job layoff there will be social crisis, a human crisis and there could be social upheaval. Mr Bérenger: Can I ask the hon. Minister whether among the five firms that have already received public funds from either Government or the SIC there is any where there are no guarantees, there has been no asset swap and no collaterals? Dr. Sithanen: Again let us look at the instruments Mr Speaker, Sir. In the case of the asset swap, the company has already sold the building to the SIC. In the case of debenture, a debenture is a loan at 5% rate of interest and then there is a ranking of the payment of this loan. In one case, it is a small amount of Rs3 m., it is a guarantee given to the banks for 50% of the amount lent. Now, the conditions put are basically the conditions precedent and the conditions subsequent, Mr Speaker, Sir. There are a lot of conditions that are put as they need to take certain decisions to reduce the costs and they need to take certain decisions to repay the debenture. The guarantee is a small amount, Mr Speaker, Sir, if this is what the Leader of Opposition has in mind, but for the large amount that has forked out there are guarantees given in terms of assets and other collaterals. Mr Bérenger: Let me move to two of the five firms which have been mentioned, World Knits: we have been told how much money World Knits has received. The hon. Minister had told us that an inquiry is on the cross shareholding between that company and another where certain events have taken place. Can we have more details about the cross shareholding which the hon. Minister, himself, referred to? Dr. Sithanen: Mr Speaker, Sir, the committee has issued a communiqué and I am sure that the hon. Leader of the Opposition has had the time to read the communiqué. There is cross shareholding, but the information given to me, Mr Speaker, Sir, is that there is no interparty relation between these two companies. Let me also inform the House that one of the subsequent conditions imposed on World Knits is that they have to dispose of their expenses for leasing of cars and these have been transferred from the company to the individuals themselves. It is unfortunate that this has happened but the money given to World Knits has not been used for that

8 7 particular purpose. Mr Bérenger: In the case of RS Denim, before money from the SIC went to that firm, can I know whether an evaluation - and if yes, by whom - of their assets has been made and whether it is a fact that, in the past, RS Denim gave as guarantee State lands? Dr. Sithanen: I am not aware of whether State lands have been given as guarantee, but let me make it very clear to this House, Mr Speaker, Sir. This is a good project. It was approved by both the former Government and by this Government, Mr Speaker, Sir. There are three companies that are within the parastatal set-up that have supported RS Denim. First, it is the National Equity Fund. Mr Speaker, Sir, the decision was taken in May 2005 to support RS Denim, to the tune of Rs100 m. for the main reason that there were two very important banks that were supporting the project, DBSA and Barclays. Second, the DBM has supported this project to the tune of Rs50 m. and the decision was taken in October Third, SIC has supported to the tune of Rs75 m., the decision was taken in September So, Mr Speaker, Sir, because it was a good project, both the former Government and this Government have supported it. Out of the Rs200 m., Rs150 m. were committed by the former Government and Rs75 m. by this one. They have had two unlucky circumstances. First, there has been cost overrun which has been quite high and second, when they open, they hit the recession. Now what has happened Mr Speaker, Sir? The DBSA, which I am sure the hon. Leader of the Opposition will agree with me, is a leading financial institution in Southern Africa. They are very concerned; they have taken over the management of the company. They have appointed an independent manager and, in fact, things have improved since. They have taken over and instead of selling it at a distressed price where people might lose their job; we have agreed to support them but we have a first rank guarantee in case it is sold and Government will get its money back, Mr Speaker, Sir. Now with respect to the point that the hon. Leader of the Opposition has made on land, I don't know whether the building has been constructed on State land because we have many difficulties on this issue, whether the land, itself, can be used as a guarantee. Because, otherwise, what happen, is that we cannot remove the buildings and you keep the land. I don't know whether this is what the hon. Leader of the Opposition has in mind because very often, Mr Speaker, Sir, in the specific circumstances, as it is an immovable property; they can use the land as some sort of guarantee. I don't know whether it has happened in this particular case I have to check. Mr Bérenger: I have not got an answer as far as the asset worth as at to date of the company concerned. Dr. Sithanen: Mr Speaker, Sir, the information I have is on the total indebtedness of the five companies. The highest one is RS Denim at Rs 800 m., then Avant (Mauritius) at Rs48 m., Beachwear Exports Company at Rs70 m., RS Fashion at Rs70 m. and World Knits at Rs300 m. These are the indebtedness. I don t have the figures as far as the asset is concerned but let me make very clear, Mr Speaker, Sir, in the case of RS Denim, the asset is worth more than Rs1 billion because of that building itself. Mr Bérenger: We have to check on the worth of the assets, the hon. Minister

9 8 has made it clear that hundreds of millions of rupees from the National Equity Fund, DBM and SIC have gone into the RS Denim. He said, himself, that there has been massive project cost escalation. My information is that the project evaluation moves from some Rs800 m. to more than Rs1,300 billion. Can I ask the hon. Minister whether, before fresh additional money is put into that, because all this happened over the recent years not at the start of the project, a full inquiry has been made into why the project jumped from Rs 800 m. to Rs1.2 m; whether second hand equipment was purchased and overvalued and that, therefore, there have been illegal transactions, there has been diversion of funds including of SIC, DBM and NEF. Dr. Sithanen: Mr Speaker, Sir, let me be very candid as the hon. Leader of the Opposition very often teases me. I am not happy on how it has been done. Having said that, Mr Speaker, Sir, we need to act also in a very responsible manner. Project evaluations were carried out prior to this Government coming into power and prior to me assuming the office of Ministry of Finance. The project and the detailed business plans were presented to all three organisations way back in Barclays, which is a banking institution of repute, and DBSA supported it, Mr Speaker, Sir. The NEF (National Equity Fund) as well as the DBM have already agreed to support the project. And often you are in a very tricky situation. We have had an inquiry, the DBSA also has done an inquiry but, at the end of the day, the project has to be completed. I believe c est un excellent outil industriel. Maybe the hon. Leader of the Opposition is right that we have to investigate the cause of the cost overrun, but as far as these three organisations are concerned, they have secured their collateral. We have made sure that the Rs30 m. additional - the only additional that we have given - Mr Speaker, Sir, is the Rs30 m. When the DBSA - a huge team - came to see me and said that they are putting the company in bankruptcy. I told them: look, you will send the wrong signal; you will put all these people out of work isn t it possible to do something? They said: you have to give us money. I say: we cannot give you money. This was very clear. This is where they start discussing and they said: could we have a facility of Rs30 m. until we find un preneur. But then, we put the condition that we want to have this Rs30 m. back and this would be a first rank security. This is how it has unfolded. Let me say again, I am not happy the way it has happened. But you know we inherited that baby, Mr Speaker, Sir, and we had to look after the baby, unfortunately. Mr Bérenger: I am not challenging the viability of the project at the beginning. I have never said that. It was a viable project. What I am asking is whether credible investigations will take place as to the use of these millions of rupees from NEF, DBM, SIC which, I repeat, according to my information, have been swindled; second hand machinery has been overvalued and money has gone where it has ended. Will a full criminal investigation be carried out? Dr. Sithanen: Mr Speaker, Sir, the DBSA is carrying out an investigation and we will support the DBSA in order to find out exactly what happened. They have also been requested, at different stages of project implementation, to inject additional fund and they reached a stage where they said that they don t have additional fund. So, we have to make sure that public money that has been committed and invested by both the former Government and this Government is protected and, at the same time, we have

10 9 to make sure that the additional funding of Rs30 m. is protected in the event that they have to dispose of the assets. Our priority, Mr Speaker, Sir, in addition to finding out what the hon. Leader of the Opposition has stated, we have to keep cet outil de production which is very good for the region. Unfortunately its opening has coincided with the recession and we have to maintain the jobs of people. Mr Bérenger: Concerning the firm RS Denim, can I ask the hon. Minister whether he is aware Dr. Sithanen: Which firm? Mr Bérenger: Same firm RS Denim! Whether he has information, which I have, to the effect that as at now, end of May, RS Denim owes the Central Electricity Board more than Rs8 m.? Dr. Sithanen: I am not aware of the specific liability that the hon. Leader of the Opposition has mentioned, but it seems to me, Mr Speaker, Sir, when the officer of the DBSA came to see me, they did mention that they were not covering their operating expenses at that time. I was informed this morning, Mr Speaker, Sir, that since the change in management and the appointment of a new gentleman from South Africa to look after it, things have started to improve. I did give to the hon. Leader of the Opposition the indebtedness of RS Denim which is at Rs800 m. so I am sure part of that indebtedness could be current liabilities in not paying the utilities that the hon. Member mentioned. Mr Bérenger: Can I know the names of the consultants that were involved in those two cases, World Knits and RS Denim? Dr. Sithanen: Mr Speaker, Sir, in the case of RS Denim, the job has been carried out by DBSA itself and in the case of RS Fashion it is Mr Satar Hajee Abdoula who is a consultant. For World Knits, Mr Speaker, Sir, it is BDO/DCDM, represented by Mr Ebrahim, for Avant (Mauritius) it is KPMG represented by Mr Deven Padiachy and for Beachwear it is BDO/DCDM represented by Mr Ebrahim. Mr Jugnauth: Mr Speaker, Sir, may I know from the hon. Vice-Prime Minister how many applications have been received from SMEs, since when and why is it that none has so far benefited from the ASP? I hope the Minister will not come back again to the definition of SME, because we all know that under the company law, there is a definition with regard to SME and companies other than the small private companies. Dr. Sithanen: Mr Speaker, Sir, the hon. Member cannot ask the question and give the answer at the same time. He asks questions and I give answer. Mr Speaker, Sir, we know how tricky the definition of SME can be. There is one company with 160 employers. Some people tell me: you have to look at the number of employees, others that we have to look at turnover. Yesterday, I chaired a meeting. My colleagues, the Minister of Industry, Science & Research, the Minister of Women s Rights, Child Development & Family Welfare and the Minister of Business, Enterprise & Cooperatives were there. We took a decision, because for seven years, there have been reports on how to classify SMEs. I read a report of 100 pages from the experts. I was more confused at the end, Mr Speaker, Sir. So, we have taken the decision that henceforth all companies that are below Rs10 m. would be classified as S, all

11 10 companies between Rs10 and Rs50 m would be classified as M (Interruptions) Turnover! And above Rs50 m. would be large. I must say that there are some that have applied, but the difficulty we are facing with that scheme is that many are individuals. So, that s why we have introduced in the Budget a scheme that we want them to be corporatized then it becomes easier. However, there is Rs100 m. from the other scheme which has been used to help the SMEs and I can give a list of all these SMEs that have benefited. In fact, I did give some indication the day before yesterday of how they have benefited. The problem we are facing with this one is that you need to discuss with a company and we are encouraging the small business to corporatize. And that s why we are waiving the Land Transfer Tax, the registration duties and when they remove their assets from an individual company and put it in a corporate entity. Mr Dulloo: Mr Speaker, Sir, the hon. Minister has stated the state of the indebtness of the so-called distress and viable companies which have been afforded financial assistance under the ASP after due intelligence. We have learned, for example, that RS Denim has got a debt of Rs800 m. plus. So, can we have an indication as to the amount owed to the DBM, the State Bank of Mauritius and also the National Equity Fund and the security given for the amount owed to these bank institutions? Dr. Sithanen: I have given the answer already, Mr Speaker, Sir. I gave the amount. I also said when it was approved. Obviously, the security is always on the assets of the company. In some cases, the shareholders have given their personal asset as collateral. Mr Bodha: Mr Speaker, Sir, in view of the fact that we do not know the extent or the length of the crisis, can we have an idea of the lifespan, the duration of the breathing space given to each company by the funds that we have provided? Dr. Sithanen: One of the most important criteria for such type of support is F - flexibility. There is no one size fits all, Mr Speaker, Sir. It has to be temporary, targeted, and timely, it also has to be flexible and it has to be sustainable. Mr Speaker, Sir, in the case of RS Denim, I think the facility I have mentioned is until 30 June What will happen after 30 June 2009? Nobody knows! If someone knows, Mr Speaker, Sir, my office is open. That s why we have put more money in this Budget to save jobs and that s why we have put more money also in training. We hope it will not happen. This is risk and reward analysis, Mr Speaker, Sir. The reward is: we can save jobs. The risk that the hon. Member mentioned exists and it exists all over the world. Look, Mr Speaker, Sir, at GM, the icon of American capitalism. For six months they have been fighting to save GM. This morning I read the icon of capitalism, la fièreté des Américains, is collapsing. Who could have forecast this, Mr Speaker, Sir? Mr Bérenger: Two last questions, Mr Speaker, Sir! Again, RS Denim, the main shareholder, is a backbencher of the Labour Party. Can I ask the hon. Minister whether he knows that the Development Bank of Southern Africa is the main involved party in this entire affair? Can I know from the hon. Minister whether he has information as to who was in the recent past and may be still representative of DBSA

12 11 in Mauritius? Dr. Sithanen: I don t know Mr Speaker, Sir, I will find out. But let me inform the House, Mr Speaker, Sir, that the DBSA, which is the main creditor, was very concerned and it caused the main shareholder to relinquish all of his rights, not only in the company, but also in the management. Subsequent to this they have appointed a new manager and, if I am not mistaken, I speak under correction, Mr Speaker, Sir, they have appointed a firm to look after their interests. I don t know whether it is one of these top five consulting firms but I will find out. They would like to dispose of the assets and we have asked them whether they can do it in an orderly way instead of doing it in a distressed way pour sauver cet outil de production and keep the jobs of the workers. Mr Bérenger: Can we be provided with the name of that firm which the hon. Minister has referred to and would he care to check whether Mr Amédée Darga is not and may be still the representative of DBSA in Mauritius? Dr. Sithanen: No, I am not aware, Mr Speaker, Sir. I will check. Mr Bérenger: Mr Speaker, with your permission, I am really surprised that the hon. Minister of Finance knows the debts of RS Denim - massive Rs800 m. debt and yet he does not know the value of the assets as at today of RS Denim? Can I know whether any examination of the assets worth of the RS Denim has been carried out and if yes, by whom? Dr. Sithanen: I don t have the answer to that specific question, Mr Speaker, Sir, which, in fact, does not arise from the main question of the hon. Leader of the Opposition. Let me say a final thing, Mr Speaker, Sir. I think it is the last question. It is not easy. We are navigating with very little visibility, predictability and heightened volatility, Mr Speaker, Sir. Nobody knows with certainty what the depth is, what is the length of the recession, end of the recession, Mr Speaker, Sir. What we are trying to do is to save jobs, but something else I must tell the House. We are trying to save vital sectors of the economy also. This is important. Many people seem to forget those vital sectors of the economy. We are trying to save textile and clothing. There will be some risks; we are trying to do our best to mitigate the risks and make sure that we have a judicious use of public funds, Mr Speaker, Sir. MOTION SUSPENSION OF SO 10(2) The Prime Minister: Sir, I beg to move that all the business on today's Order Paper be exempted from the provisions of paragraph 2 of Standing Order 10. The Deputy Prime Minister, Minister of Renewable Energy and Public Utilities (Dr. R. Beebeejaun) rose and seconded. Question put and agreed to.

13 12 (12.13 p.m.) PUBLIC BILL Second Reading THE APPROPRIATION (2009) BILL (NO. IX OF 2009) Order read for resuming adjourned debate on the Appropriation (2009) Bill (No. IX of 2009). Question again proposed. The Minister of Housing and Lands (Dr. A. Kasenally): Mr Speaker, Sir, since this Government came to power this country has been subjected to a series of shocks. The massive reduction by 36% in the price of our sugar export to the EU, the dismantling of the multi-fibre agreement and the oil crisis has been followed by an energy crisis, which generated a food crisis followed by now a financial meltdown and economic crisis. The 2009 Budget is, in fact, a landmark in our history as it marks the breaking away from the traditional July to June fiscal year to one which matches the calendar year. Mr Speaker: I am sorry. I don t think there is any need to distribute the list of orators to all Members of the House, please. Dr. Kasenally: But, more importantly, this Budget proposes a series of measures. In fact, there are no less than 200 measures aimed at ensuring that our country, through strong State and public participation, faces this dignity and honours the challenges posed by the world s deep recession The world is currently going through an unprecedented economic slowdown never experienced before. What started as a sub-prime mortgage crisis that caused the crash of the home market in the USA and also in the United Kingdom has proved to be a global meltdown which has set the financial world into a spin with consequential bankruptcy of prestigious financial institutions. Major industries all over the world went nearly bust throwing millions of workers out of a job. In Europe, countries like Iceland and some East European countries have nearly gone bankrupt. The economy of the world has started to shrink. Even the G20, comprising the world s richest countries, has no clear idea of how to proceed as the situation is so unpredictable. After the long nights of deliberation, I understand, some long knives also were brandished, and with great difficulty, they came up with a consensual decision of tightening up financial control, establishing a regulatory and credible financial mechanism. They also decided to target the tax havens. Following the G20 Summit, the non-compliant tax havens have been named and shamed in the first instance. Mauritius was instead classified in the white list which meant that it has a viable and strong financial institution, thus adding to the credibility and soundness of our financial and regulatory institutions. No

14 13 sensible and knowledgeable patriot can deny that these are indeed hard times. And these hard times constitute both a formidable challenge for the nation to demonstrate its capacity to adapt and to resist shocks and a great opportunity to show its mettle in weathering the storm and in preparing itself for the post-global crisis period. It is no longer a question of Government s or private sector s concern. Nous sommes tous sans exception concernés. Time is of essence. All of us need, as one body, to lift ourselves up from our boot straps, roll up our sleeves and work smarter and with more productivity in all walks of life to spare our country damaging turbulences gaping us wide from abroad. It cannot be business as usual. There must be a change in the mindset. We need the right mix of intelligence, commitment and energy as a nation to keep our country firmly and soundly on its legs. Nothing happens by mere coincidence. If we have had a resilient economy up to now it is due to the farsightedness of the Minister of Finance and Economic Empowerment who, in the face of such financial and economic quagmire, took the bold and reformative decision to turn around our economy as far back as He was proactive and introduced his stimulus package well before the economy of the world started its downturn. For the past few days, we have been listening to a litany of acrimonious recriminations against Government by some pseudo-experts, some outside the House, but this country is waiting for them to come up with concrete and implementable alternatives. I understand that somebody suggested that we should convert our reserves into gold; something which even the rich oil producing countries are hesitating and are avoiding despite the fact that they are overburdened with wealth funds. If we give way to unreasonable and unsustainable demands, the country will simply go bankrupt and I don t think anybody in this House or outside wants us to reach that state. It is in this context that the Budget aims at riding out the general crisis, saving jobs, protecting people and at preparing recovery. Mr Speaker, Sir, food and shelter are undoubtedly two of the most basic human needs and I consider I am privileged to hold the portfolio which is incontournable in addressing both needs. This Government is committed to achieving its objective of un toit pour tous. My Ministry will be allocating shortly some 553 low cost housing units to low income groups on six sites across the island. In addition, construction of some 550 low cost housing units will start soon. I must confess that compliance with the provisions of existing legislation and guidelines regarding procurement causes delays in project implementation. I am sure that the measures announced by my colleague regarding procurement procedures will certainly help in reducing these delays. The casting of roof slab and the building materials schemes introduced in 1998 under the leadership of our Prime Minister, Dr. the hon. Navin Ramgoolam, was another milestone in Government s endeavour to assist those down the ladder. These schemes were introduced to assist our citizens who are downtrodden but who strive to construct a house on their own. For the period starting July 2008 to date, around Rs168 m. have been disbursed to some 3031 heads of households both in Mauritius and Rodrigues, because the hon. Member from Rodrigues was complaining that they

15 14 have been left out. But, as far as the Ministry of Housing is concerned, we have been extending this casting of slabs which is a tangible help to those underprivileged. No effort is being spared for around Rs47.6 m. to be disbursed to some 1008 beneficiaries before the end of this financial year. This is not un effet d annonce but a fact. In line with its policy of democratisation and empowering people, this Government amended the State Land Act to enable owners of the ex-cha housing units to become owners of their plot of land on which stand their housing units. Out of some 16,525 owners where there is no impediment to the land being sold, around 10,501 applications have been received. To date about 8,700 letters of intent have already been issued to these applicants. Officers of my Ministry have gone to each and every CHA housing estate to capture and encourage every possible beneficiary to come forward and benefit from this measure. In its furtherance to facilitate access to land to very low income earners, works are in progress for some 242 fully serviced sites to be allocated to eligible beneficiaries. Land is one of our most precious resources. Imagination turns ordinary land into a landmark. In April 2008, Government entered into an agreement with the Mauritius Sugar Producers Association on the implementation of the sugar sector reform wherein it was, inter alia, agreed that the latter would grant a total of 2,000 arpents of land to the State to be used for social and agricultural diversification. In its farsightedness and wisdom, Government has decided that half of the 2,000 arpents from the above deal would be allocated for social housing programme. To that effect, some 156 arpents of land have been identified. Capitalism may have won, but capitalists have started re-examining how to adapt themselves to the 21 st century. The question of how to create prosperity and social justice is at the heart of the debate. Whether capitalism care about the poor and the disadvantaged are legitimate questions. At this junction, it is high time that the debate focuses on solutions rather than ideology and that we provide economically viable solutions to social problems. This is precisely what my colleague wants to achieve in this Budget in making provision for all profitable firms to either spend 2% of their profits on Corporate Social Responsibility activities approved by Government or to transfer these funds to Government to be used in the fight against poverty including social housing. More importantly, the private sector is being called upon to use its resources to deal with the poor as consumers and not burdens. Charity begins at home. This Government is leading by an example. At a time when financial resources are scarce, particularly in the public sector, Rs100 m. have been earmarked from the MID Fund to co-finance a Rs280 m. programme with the CEB, CWA and WMA to clean up the NHDC housing estates and rehabilitate the water, electricity and wastewater infrastructure. This will ensure that the NHDC housing estates will be provided with a congenial environment. Waterproofing works will be carried out shortly in seven housing estates at an estimated cost of Rs63 m. These works will relieve some 3089 families residing in

16 15 these housing estates from much difficulty and hardship encountered due to leakage of water from roofs, shower trays and canopies, water ingress through joints, wall cracks and discharge pipes. Various representations have been made by families occupying ground floor at Plaine Verte, Malaysian II and those residing at Vuillemin estates to the effect that each time there is heavy rainfall, their houses are flooded due to lack of provision for water evacuation. Cut-off drains will be constructed at these two housing estates. This measure, which is estimated to cost Rs1 m., will bring a long term solution to the families. Residents at Beau Vallon housing estates have been complaining about loose spalls of concrete both from inside and outside the housing units. This situation represents a potential danger to some 216 families. Furthermore, the exposed iron reinforcement will inevitably rust thereby affecting the very structure of the buildings. For the safety of these families and to avoid further damages to the iron reinforcement, remedial works will be undertaken soon. The estimated cost is of Rs2.8 m. In a time of dire economic situation, this unprecedented gesture bears testimony to the fact that those, who are at the lowest rung of the ladder, are at the heart of this Government s concern. However, no institution is an island. Government, on its own or even in partnership with the private sector, will never be able to attend to all needs. The civil society has a very important role to play. I wish to seize this opportunity to make an appeal to the owners of the NHDC houses that it is the duty and responsibility of each one of them to ensure that their own living environment is properly maintained and where il fait bon vivre. This Government wants to assist but does not want to create dependence and rob people of their dignity. It is high time owners of NHDC housing estates assume their responsibilities and organise their syndics as provided by the law of co-propriété. These houses are theirs and they must from now endeavour to maintain them. To that effect, the housing unit of my Ministry is undertaking a proactive campaign of inculcating the notion of syndic into the mœurs of our NHDC citizens. I understand, as the hon. Leader of the Opposition said, it is a very difficult nut to crack but I think, with the help of each and everybody, and with the goodwill of everyone, we can crack that nut. Following the Finance Act of 2006, 1164, out of the 1275 campement site lessees, have opted to enter into the new 60-years lease. The revenue thus collected for the period of July 2008 to date is around Rs757 m. To better reflect the market of the land and to ensure that the State obtains a fair return on its prime land, the individual site policy has been reviewed and aligned with that of the new Campement Site Lease Policy. The point has been raised that we are leasing it for quelques sous ou deux cash. I think we don t even see these pieces of money nowadays. To ensure that no workers are laid off due to the present difficult economic situation, Government will, in regard to hotel reconstruction, consider refunding either 50% of the wage bill of the difference between new rental and old rental for hotels whose rentals have been recently increased under the new Industrial Lease Policy.

17 16 Government has also agreed to the acquisition of hotel rooms and villas by individual foreign and Mauritian investors on condition that they obligatorily lease back hotel rooms and villas to hotel operators. Furthermore, payment of increases in rental will be suspended for small hotels on less than one hectare, with less than 50 bedrooms, which are facing financial difficulties. Arrears in rental for small hotels will be rescheduled to be effective as from January 2011 in five yearly instalments, whereas for other hotels the rescheduling period will be three years with no moratorium. Mr Speaker, Sir, the health and good living conditions of the citizens is high on the agenda of this Government. My Ministry has already purchased land from Rose Belle Sugar Estate to relocate the inhabitants in the vicinity of Mare Chicose landfill. Moreover, the State Lands Act will be amended shortly to ensure that the rights of property of these inhabitants are respected. In the same spirit, my Ministry has already identified land at Chamouny to relocate some 44 families who are exposed to the risk of sea swells at Rivière des Galets, Petit Bien Housing Estate. In line with the Memorandum of Understanding signed in October 2005, there has been during the last four years sustained action for the implementation of hydrographic survey projects with the assistance of the Government of India. As from February 2009, Mauritius has adhered to the North Indian Ocean Hydrographic Commission. My Ministry envisages setting up a hydrographic unit, with the help of Government of India. I wish to seize this opportunity to express our deep appreciation to the Government and people of the Republic of India with whose support updated nautical charts for economic use, research and safe navigation will be on sale shortly in Mauritius, and the proceeds will be shared by both Governments. This has been possible because of the special relationship of our Prime Minister with the Government of the Republic of India. Planning is a key area of work in my Ministry, and its importance is becoming more evident with the concept of Maurice Ile Durable. In fact, sustainable development has become one of the most important agendas on the global stage. A holistic approach to planning aims at providing development approaches that are not only environmentally sensitive, but are also socially and financially responsive. During the last financial year, we have initiated some important tasks and projects that can address many sectorial and individual initiatives through effective planning and meet our target towards economic development and empowerment. The following projects are under way - Preparation of Planning Policy Guidance on IRS and RES Preparation of Detailed Schemes at Palmar and St Antoine Preparation of new Outline Schemes for Five Municipal Council Areas Review and modification to District Council Outline Planning Schemes.

18 17 Actually, only this morning, I signed the document to be released to public for consultation for five District Councils - New Land Planning and Development Bill Interim Revision of Quatre Bornes Outline Scheme Contribution to Streamlining of Permits Planning Policy Guidance on IRS/RES and Gaming Houses which is causing some distress to people in some towns. With all the gloom and doom scenarios, there is always a silver lining over the dark clouds. The experts are already noting a flicker of recovery. Yesterday, Bloomberg stated that a survey of Business Economics predicts that the US recession will probably end in the third quarter of this year and will begin to expand in the fourth quarter. So, we have to tighten our belts and brace ourselves to weather the storm for Come what come may, time runs through the roughest hour, as Shakespeare puts it. There are other indicators, which I have seen this morning from Bloomberg and it says: the US recession will end third quarter. This morning, we were talking about Stimulus Package and even USA Government is in deep problem; negotiators in Berlin, working throughout the night, fail to finalise the rescue of General Motors. So, you can understand the difficulty we use to have before giving any Stimulus Package as indicated recently by my colleague, the Vice-Prime Minister, Minister of Finance & Economic Empowerment. There is also a big problem to balance Budget, and the New Zealand s Finance Minister deferred tax cut to curb Budget Deficit, prompting the poor to raise the country s credit rating outlook. The Federal Reserves of the United States stepped up asset purchases to prevent its balance sheet from contracting until policy makers are convinced that an economic recovery has taken place. As you can see, Mr Speaker, Sir, there is a lot of juggling going on and, in fact, all the economic thinkers and deciders, various Governments in various countries, are unable to set their targets precisely for the very simple reason that nobody knows what is happening. But it is comforting to observe that there is a flicker of hope. Let s hope that the recession will go down, but I must also sound a note of caution. As the economy of big countries like India and China starts getting on, there will a surge in the demand of oil. I hope that, after the financial crisis, we will not have a problem of oil crisis. Fortunately, here also, there is hope, because a lot of speculators and fund hedgers have got a massive stock of oil, which they have stocked in huge containers and are lying somewhere in Europe and around the Atlantic, ready to be discharged as the price goes above $50. We hope this will stabilise the energy market in the post recoveries period, and we will not find ourselves in another energy crisis, which again will trigger a food crisis. Mr Speaker, Sir, this Budget has had the excellent technical expertise of Dr. Rama Sithanen. Dr. Rama Sithanen has put his heart in it; and; as you know; he is not a very ordinary person. He is one of the very few Ministers of Finance who have been invited to attend the OECD Conference on economic outlook, later this month, in South Africa. The Prime Minister has put his heart, mind and has been spending endless long hours day and night. The overriding consideration for him has been to

19 18 protect the poor and the downtrodden. That is what we have pledged to the poor Mr Speaker, Sir, and that is what we shall deliver. Thank you Mr Speaker, Sir. (12.41 p.m) Mr J. C. Barbier (Third Member for GRNW & Port Louis West): Mr Speaker, Sir, I just listened to the hon. Minister of Housig and Lands and, in fact, again, he is only announcing 563 housing units soon. We know how soon is soon for this Government! L année dernière on nous avait promis 774 Firinga type houses mais il n'y a rien eu. Cette année-ci, encore une fois, malheureusement, on vient nous annoncer que nous aurons 533 et que, probablement, il y en aura d autres après. How soon is soon! Ce gouvernement aborde le dernier tournant de son mandat, il termine sa quatrième année aussi je me demande how soon is soon. On verra, dans les jours qui viennent, si finalement il y aura vraiment certaines concrétisations au niveau de la politique du logement M. le président. Ce budget 2009 du gouvernement de l Alliance Sociale ne fait, en fait, que confirmer sa politique antisociale. Je me pose la question: à quoi reconnait-on un bon budget? Un bon budget, M. le président, prend en considération l attente, le besoin, l avenir du peuple dans son ensemble. Un bon budget donne à la population plus de moyens et de possibilités tout en préservant un avenir durable dans le long terme, sans pour cela ajouter à la souffrance des plus démunis et des faibles de la société. Il est possible, M. le président, dans les conditions actuelles où nous vivons, d assainir la situation dans le plus long terme possible; de limiter les dettes en réduisant la pression du jour et en trouvant des solutions tempérées pour le long terme. Croyez-moi, M. le président, ce n est pas un exercice compliqué lorsqu'on n'est pas pressé de tout faire dans le court terme et si on n'a pas aussi des hidden agendas. Je comprends que la souffrance des gens n est pas le souci du gouvernement. Le gouvernement veut des résultats comptables, même s il faut que cela appauvrisse la population, massacre les travailleurs, contraigne les veuves et les handicapés; tout ce qui finalement est antisocial. M. le président, je ne voudrais pas me contenter à ne dire que des choses sans pour cela apporter certains éléments de ma réflexion qui conferment cette politique antisociale. Commençons par le logement: M. le président, les promesses n ont pas manqué depuis ces dernières années. Où sont ces logements sociaux promis depuis quatre ans? Le gouvernement n a fait que terminer quelques appartements de la NHDC qui étaient déjà projetés avant les élections générales, et puis il n y a eu plus rien. Des maisons ont été livrées récemment à La Valette, Bambous. C est un projet de Médine en collaboration avec le gouvernement qui ne concerne que quelques dizaines de familles. Je dois souligner que parmi se trouvent ceux qui avaient défoncé les maisons avant les élections à la Tour Koenig et ailleurs. Ils ont eu ce privilège parce qu il y avait certains engagements politiques de la part de certains membres de l autre côté de la Chambre. Alors, où sont les 774 Firinga type houses annoncées dans le budget

20 19 précédent? Rien M. le président! L ancien gouvernement avait initié de gros travaux à la route Militaire pour enterrer les câbles électriques du CEB. Plus de R 45 millions avait été dépensé pour ce projet afin de faire construire sur le site des maisons pour les habitants de Plaine Verte et Roche Bois. Le site se trouve juste à la frontière, entre Roche-Bois et Plaine-Verte, mais, malheureusement, M. le président, ce projet a tout simplement disparu. On n'en entend plus parler malgré les promesses faites à la Chambre et aux habitants par l'honorable Dullul. Ces projets ne verront apparemment pas le jour. Laissez-moi vous rappeler, M. le président, que le gouvernement précédent avait fait construire des maisons à la Tour Koenig, à Riche Lieu, à Riche Terre, à Baie du Tombeau, à Chebel. On avait éliminé les longères. Dans ma circonscription, il y en avait au moins deux mais c est malheureux de le dire qu aujourd hui dans la circonscription du Premier ministre il y a toujours et encore des longères. Il n y a aucun projet approprié pour assainir cette situation à Baie-du-Tombeau. Si ce n est pas de l antisocial, c est quoi, M. le président! Je voudrais vous rappeler aussi que, pour ceux qui habitaient à Karo Kalyptis et aux abords des rivières de Roche-Bois entre autres, le précédent gouvernement avait fait construire des maisons. Une partie de ces gens avaient été relogés ailleurs, notamment à Riche-Terre et aussi à Cité Florida, Baie-du-Tombeau puis tout cela s est arrêté depuis que ce gouvernement est au pouvoir. Et on nous dit que cela va venir bientôt! Déjà quatre ans! On attend toujours! M. le président, je ne comprends pas. Le gouvernement dit tout le temps: we are putting people first. I don t know who are the people they are putting first! Parce que, malheureusement, au niveau du logement, les gens attendent toujours, et ils risquent d attendre encore longtemps. M. le président, je voudrais maintenant aborder le dossier des pêcheurs. Je ne sais combien de fois ils ont dû descendre dans la rue pour se faire entendre et une pétition en date du 30 avril 2009 a de nouveau été envoyée au ministre. Les revendications des pêcheurs ne font qu augmenter d année en année. Maintes fois, ils sont descendus dans la rue pour se faire entendre mais là aussi, malheureusement, le gouvernement fait la sourde oreille. J attire une nouvelle fois l attention du ministère sur au moins dix de leurs doléances qui tournent en rond depuis quelques années. Laissez-moi citer quelques points sur la pétition en date du 30 avril 2009 qui était adressée au Premier ministre et au ministre responsable de la pêche - le renouvellement des radeaux; la restriction des cooperatives; la protection des lagons; l analyse du mauvais temps par la météo; la location des cartes aux pêcheurs; le fonctionnement du FIT et du Fishermen Welfare Fund; le financement des projets pilotes; la politique d associer la famille de pêcheurs au niveau des projets;